Innovation in the automotive sector - there's room for more.

Our very first Innovation Insiders Index rated UK big businesses on their effectiveness at innovation, as assessed by industry insiders. It also offered a snapshot of how different industries performed against our six principles of innovation, identifying distinctive sector approaches. Today, we’re taking a look at the automotive industry.

What’s driving automotive today?
The Index indicated that big automotive players are focusing their use of innovation on the pursuit of luxury. For companies like Jaguar Land Rover and Rolls Royce, the top priorities are customer experience and refining their expertise heritage, while they reinvent themselves as global luxury brands.

They’re relying heavily on internally-driven characteristics: in terms of our innovation principles, these are Capabilities and Competitive advantage. They’re successfully leveraging their huge experience and expertise as well as their companies’ scale. But the Index also highlighted the relatively low willingness of this sector to collaborate with other businesses and embrace cross-industry ideas.

What’s facing them on their journey?
Consumers no longer see cars merely as a mode of transport: they expect an entertainment and communication space that supports their busy lifestyles and keeps them connected. At the same time, both our demand for cars and the way we buy them is changing. With increased urban living (60% of us are expected to live in towns by 2030) the vehicle types wanted is evolving, while consumers expect a seamless experience through pre-sale, sale and post-sales via the channel they choose, rather than uniformly queuing up to be served at the showroom.

Challenges and opportunities
We believe that embracing collaboration with the technology sector – an industry that’s more than keeping up with changing trends – could hold the key for automotive. But will this relatively lumbering sector (cars can take years to reach the market) need to adapt its business model to accommodate the rapid and agile style of tech?

Automotive brands must get creative about incorporating tech into vehicles. Offering subscriptions, regular upgrades or in-car streaming systems could help cars keep up with the outside world. And allowing cars to become part of the growing Internet of Things could encourage consumer take-up of such paid services. Plus there’s the telematics factor: collecting and using data from in-car sensors and GPS systems. It’s already starting to take off, with EU regulations requiring new cars to have eCall technology by 2018 (which alerts emergency services to serious accidents) and BMW offering a similar private service. The RAC and some insurers are using telematics to encourage better driving behaviour…and there are plenty more potential applications.

We’ve already mentioned that this sector got low scores for collaboration in the Index: you can see this in how car brands are still developing bespoke systems in isolation, like SYNC, Ford’s communication and entertainment system. By the time such systems get out on the road, they’re already behind the times. And it swims against the current of the tech market, where smartphones are being used as connected displays, for services from home heating to security cameras.

Forming cross-industry partnerships could transform this approach: Apple are already working on a car iOS: Carplay offers seamless music, calls and navigation. Or in a more concrete example of customer service, dealerships could offer added value by teaming up with tech gurus and style consultants to fully integrate your car purchase into your lifestyle and allow you to fulfil all your related needs at one touchpoint.

Our take on automotive
We believe that any move the automotive industry makes towards its high-tech future should be directed at fulfilling consumer needs. And it’s more than likely that car brands will need a co-driver for this journey – most likely a mobile or tech company.

Download the full Index to see more of our commentary on how the automotive industry’s using innovation today. Tell us what you think – how else can automotive brands innovate and meet consumer demands? Join the conversation on Twitter: #innovatebig #6principles